“I’m thinking of advising them to look into digital. We’re not there yet, like Alibaba. We have to look for opportunities if we’re going to survive the next 50 years. We can’t depend on what we have now.” John Gokongwei at 90 (now 92) when asked what advise he can give after announcing his retirement from JG Summit, the conglomerate he founded in 1957 that is now valued at almost P700 Billion.
What has been built in the past is good enough at the time it was built. However, it may no longer hold its value today or in the future. You will have to be confronted with questions such as…is your business relevant? Is it sustainable? In a very competitive marketplace where a crisis in North America or a calamity in Thailand can compromise local businesses, nothing really lasts forever.
There are two dominating pressures every industry is presently facing…extreme clutter of the marketplace and the relentless speed of change! Entrepreneurs spearhead many businesses and its dynamics are different compared to professionally run organizations. In order to stay afloat in a complex and changing marketplace, businesses would have to reflect on their present status and manage future expectations.
Reinventing your business is one very good option in making a proactive decision during tough times.
Reinvention means redirecting the business direction of the enterprise – something that requires the creative mindset and confident attitude of a true borne entrepreneur and the technical skills of professional executives. If you own business, be ready to embrace change and be highly skilled in creating different ways to do business. The mark of a true entrepreneur is the ability to innovate and effect changes that translate to better results.
So, if you are doing the same things as traditional business owners have done, think again. In the end you would notice that what used to be effective and productive may not be the same case at present. Of course it is a saddening and frustrating circumstance, because the foundations of your business would be revisited and possibly altered but external pressures can bring your business to the ground.
A good case in point was a 50-year old organization I was advising a few years ago. After initiating several market scanning exercises, my team concluded that their traditional operating model aggravated by the declining industry they were in was no longer sustainable.
We even formulated a 3-year Strategic and Innovation Plan to prepare the business to transition to another venture where growth opportunities offered better returns. The collective call for change was even echoed by the operating team. To make the long story short, the senior members and the Board of Directors were stubborn and stuck to their traditional working model. As predicted, the business dramatically lost its grip on customers, suppliers became direct competitors, sourcing overseas was no longer the business’ exclusive domain, sales dropped and the business lost more than 50% of its revenues all in a span of 3 years.
So, how would it be possible to welcome the idea of reinvention using Business Model Innovation? First of all, reassess your market environment and ascertain if your space where you operate is still relevant. Is it saturated? Is there a chance for your organization to increase market share? can you still make a run for market leadership? Is your product or service relevant and something that people still need or want in this day and age? What are your competitors doing? What is your biggest competitor doing? Has there been a change in the market? Identify what hinders your company objectives.
Never stick with what you have always done. Instead of consistently doing the same thing, offer a different product or service! Reinvent! It is not rational to be expecting better results if we would keep on repeating doing the same things. Make the common uncommon! Moved out of the commodity trap before it’s too late!
Prof Enrique Soriano is a World Bank/IFC Governance Consultant, Senior Advisor of Post and Powell Singapore and the Executive Director of Wong + Bernstein, a research and consulting firm in Asia that serves family businesses and family foundations. He was formerly Chair of the Marketing Cluster at the ATENEO Graduate School of Business in Manila, and is currently a visiting Senior Fellow of the IPMI International School in Jakarta.
He is an associate member of the Singapore Institute of Directors (SID) and an advisor to business families worldwide, a sought after governance speaker, book author and have written more than 200 articles and publications, including two best-selling Family Business books (Ensuring Your Family Business Legacy 2013 and 2015). You can read Prof Soriano’s business articles for free at www.Faminbusiness.com